A person holding power of attorney for the creator of an irrevocable trust can amend the trust even though the creator died before he could agree to the amendment, a unanimous appeals panel ruled yesterday, reversing a Staten Island judge.
In Perosi v. LiGreci, 80217/10, Justice John Leventhal (See Profile) said that nothing in state law prevented an attorney-in-fact from amending the trust absent a specific provision in the trust instrument. Justices Peter Skelos (See Profile), Ruth Balkin (See Profile) and Plummer Lott (See Profile) joined in the opinion.
The dispute concerns an irrevocable trust set up in 1991 by Nicholas LiGreci for the benefit of his three children. LiGreci named his brother, John LiGreci, as trustee.
In April 2010, according to the decision, Nicholas gave power of attorney to his daughter, Linda Perosi, one of the beneficiaries of the trust, giving her the authority to act on his behalf on all matters, including the authority to spend money and sell or dispose of property, “to create and fund a grantor retained annuity trust or other estate planning trust” and to “designate the trustee, income beneficiary and remainder beneficiary of any trust.”
In May 2010, Linda Perosi executed an amendment to the trust designating her own son, Nicholas Perosi, as the new trustee. All three beneficiaries of the trust consented to the amendment in writing, but Nicholas LiGreci did not. In June 2010, he died, leaving a $10 million life insurance policy to the trust.
In July 2010, Nicholas Perosi, the new trustee, filed a petition in Staten Island Supreme Court seeking an order that John LiGreci provide an accounting of the trust and hand over all of its assets and records. John LiGreci then moved to set aside the amendment, arguing that it was illegal because the trust was irrevocable.
State law allows the creator of a trust to amend it by obtaining the consent of every beneficiary, even if there is no provision in the trust instrument for amendments. However, John LiGreci argued that the statutory right to amend the trust did not extend to the attorney-in-fact.
In February 2011, Justice Joseph Maltese (See Profile) agreed and granted his motion.
“The power of attorney executed by Nicholas LiGreci, less than two months before his death, grants no powers to his agent to amend or revoke past estate planning devices, such as trusts,” Maltese wrote. “The executed power of attorney grants his agent the right to create trusts and name trustees, but the language is forward looking.”
Maltese said the right to amend the trust was a “personal right which may only be exercised by that individual.”
Leventhal’s opinion reversed.
“We disagree with the Supreme Court’s determination that the creator, acting through the attorney-in-fact, was not permitted to amend the Trust absent a specific delegation of that power in the trust instrument or in the power of attorney,” he wrote. “Rather, we hold that since the Trust did not prohibit the creator from amending the Trust by way of his attorney-in-fact, the attorney-in-fact, as the alter ego of the creator, properly amended the Trust.”
He continued, “We are cognizant of the contention that there are sound policy considerations for prohibiting an attorney-in-fact from amending or revoking an irrevocable trust, based upon the premise that a creator knows what is best for his or her trust and overall estate plan. However, if there is to be a presumption that a creator cannot act through his or her agent in amending or revoking a trust, such a policy is for the Legislature to enact, not the courts.”
Leventhal added that Linda Perosi had a “fiduciary relationship” with her father and that “the power of attorney was given with the intent that the attorney-in-fact would utilize that power for the benefit of the creator.”
Bruce Behrins of Behrins & Behrins, who represented John LiGreci, said he believed the court’s reasoning was wrong.
“It is perhaps a matter for the Legislature and not for the courts to legislate judicially, but it is also disappointing to Nick’s brother,” he said.
Jethro Eisenstein of Profeta & Eisenstein, who represented the appellants, said he was pleased with the decision.
@|Brendan Pierson can be contacted at firstname.lastname@example.org.